UK retail sales fell by 0.5% in July as exceptionally warm weather led shoppers to cut back on spending, according to figures from the Office for National Statistics.
The decline reversed the increase recorded in June, when retail sales benefited from the beginning of the summer and spending linked to the Fifa men’s World Cup. Economists surveyed by Reuters had expected a 0.5% fall in July.
The ONS also revised its estimate for June, lowering the monthly increase from 1% to 0.7%. As a result, July’s decline effectively erased the previous month’s gain.
Despite the monthly drop, retail sales volumes remained higher over a longer period. The ONS said sales increased by 1.1% over the three months to July compared with the previous three-month period.
Spending fell across several categories during July, including clothing, footwear and household goods. When petrol and diesel sales were excluded, the decline was larger, with volumes falling 0.9% during the month.
Fuel sales were affected by higher prices at petrol stations after the end of a US-Iran ceasefire pushed global oil prices higher. Rising fuel costs added to pressure on household budgets at a time when inflation was also increasing.
Grant Fitzner, chief economist at the ONS, said consumers had increased spending on sports merchandise, fans and outdoor products during the period.
However, analysts warned that household spending could come under greater pressure in the months ahead as inflation rises.
Rob Wood, chief UK economist at consultancy Pantheon, said higher energy costs were expected to push inflation towards 3%, potentially limiting the amount households can spend on discretionary purchases.
UK consumer price inflation rose to 2.9% in July from 2.6% in June, according to separate ONS figures.
The unusually warm weather also changed where people chose to shop. Sandra Prince, head of consumer at Lloyds, said spending had shifted towards retail parks and online shopping rather than traditional high streets.
She said many households had already purchased seasonal goods during the prolonged spell of warm weather, reducing demand for summer products later in the season. The end of the World Cup in the first half of July also removed a source of additional spending for retailers.
Prince said retailers would now be looking towards the autumn trading period for fresh opportunities to attract customers.
The latest figures suggest that while consumer spending has remained relatively resilient over the wider three-month period, retailers are facing a more challenging environment as seasonal demand fades and rising household costs place pressure on disposable income.
Businesses will be watching the coming months closely as they prepare for the autumn and winter shopping periods, traditionally important periods for many retailers.
